
Samco Mutual Fund, which recently got the regulatory approval to launch a fund house, will focus on launching equity schemes with a mix of Indian and international companies in the first few years of operation. Further, the fund house will use a ‘Stress Tested Investing’ approach while selecting stocks for its schemes while limiting the number of stocks in each scheme to around 25. The stress tests will factor in aspects like cash flow, pricing power, balance sheet, debt, corporate governance and leadership among other things.
While announcing the launch of the mutual fund business, Founder and Director Jimeet Modi said that the stress testing approach will help the fund house identify companies that can survive in a stressful situation while generating long-term risk-adjusted returns.
The schemes will have a mix of Indian and international stocks that pass the stress test framework, he added.
“We will make sure that all our funds have an Indian plus a global equation and therefore our investable universe across the globe today is about 75 to 100 businesses, which will actually pass the stress test,” said Modi.
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“Most of our portfolios will be in the range of 15 to 25 stocks. We will not exceed more than 25 stocks in a scheme or a portfolio because the benefits of diversification effectively go out. There is enough to show that once you have more than 15 stocks in a portfolio, the incremental reduction of risk is much lower,” added Modi.
In terms of the category of schemes, the fund house plans to first launch a flexicap fund followed by a global active fund and a tax-saving scheme.
“The first scheme that we will be launching is going to be in the flexicap category, which will be a mix of Indian and global businesses. We will then move forward to filing a global active fund. And then a tax saving fund. We are going to be only an equity-oriented asset manager at least for the next few years,” said Modi. The fund house will file the draft document for its first scheme with the Securities and Exchange Board of India (SEBI) on Tuesday and expects to launch the scheme within the next 90 to 120 days.
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